Author: Press Room

Pass Through Businesses Pay Half of All Taxes, Montana Has Most

27 August 2020
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The Tax Foundation

Pass-through businesses, such as sole proprietorships, S corporations, and partnerships, make up a majority of businesses in the United States. The owners of these firms pay individual income tax on income derived from these businesses. The marginal tax rates vary for pass-through firms depending on the state where they operate, as states tax individual income differently.
In 2018, pass-through firms made up over half of nearly every state’s private sector employment. The share of private sector employment provided by pass-through firms ranges from 49.7 percent in Hawaii to 72.5 percent in Montana.
Top marginal tax rates faced by pass-through firms also vary by state, ranging from 40 percent in states with no state and local income tax, like Wyoming and Florida, to 53.7 percent in California. These combined rates include federal, state, and local income taxes in addition to payroll tax.
Montana imposes a marginal tax rate of 46.9 percent.
A driver of variation in top marginal income tax rates faced by pass-through firms is whether a state taxes individual income and what the top marginal rate is. For example, states without individual income taxes, such as Alaska, Florida, South Dakota, Texas, Washington, and Wyoming, apply lower combined income tax rates on pass-through firms.
By contrast, states like California (with a 13.3 percent top marginal individual income tax rate) and New York (with a top marginal rate of 8.82 percent) subject pass-through firms to top combined marginal rates exceeding 50 percent. (Nevada does not have an individual income tax but has an uncapped payroll tax called the modified business tax that is levied on wages at a rate of 1.475 percent, which increases its top tax rate for pass-through businesses.)
Three states—Alabama, Iowa, and Louisiana—allow taxpayers to deduct a portion of their federal taxes paid from their taxable income. This reduces the amount of income subject to state income tax and lowers the top marginal rate faced by pass-throughs. Other states, such as Missouri, permit some deductibility but limitations to the deduction mean the top marginal rate is not affected.
Most of a pass-through firm’s tax burden is from federal income and payroll taxes. Pass-through firms must remit payroll taxes to fund programs such as Social Security and Medicare in addition to paying federal individual income tax with a top rate of 37 percent.
Qualifying pass-through firms may use Section 199A, commonly known as the pass-through deduction, to deduct 20 percent of their qualified business income from federal income tax. However, the pass-through deduction is subject to limitations for firms earning above certain income limits that operate in a “specified service trade or business” (SSTB) and other guardrails that limit the size of the deduction. This means that many pass throughs are not eligible for Section 199A and face top marginal income tax rates without it.
Pass-through firms make up a large part of the American economy and workforce, providing over half of private sector employment in nearly every state. The combined top marginal tax rate faced by these firms is a product of federal, state, and local individual income taxes. Policymakers should keep in mind the combined tax burden levied on these businesses when considering changes to tax policy.

Roundabout Completed at Hwy. 312 and Five Mile Road

27 August 2020
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The Montana Department of Transportation (MDT) announced that the paving of a single-lane roundabout on Old Highway 312 and Five Mile Road is complete. Work will now entail installing new signs, rumble strips on Five Mile Road and interim striping. In the next weeks, concrete finish-work and landscaping will occur, followed by chip sealing at the end of August. Drivers are advised to travel safely and be prepared for flaggers, workers, heavy truck traffic, and equipment entering.

Other Pipelines Expand in Face of Shutdown of Dakota Access Pipeline

27 August 2020
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As the Dakota Access pipeline deals with lawsuits aimed at closing it, other pipeline companies are anticipating an increase in demand for transportation and are expanding their pipelines. Also, the higher –risk and higher- cost alternative of transporting oil by tanker cars on railroads is seeing an increase, according the Oil Patch Hotline.
Kinder Morgan’s Highland crude oil pipeline, which carries 88,000 BOPD, which originates near Sidney, the pipeline e could be expanded with the addition of a new compressor to add another 35,000 BOPD in the next 12 to 18 months, according to CEO Steven Kean.
“So we have seen increased activity and interest in HH,” Kean told Wall Street analysts recently. “Our volumes were up this month versus last month. That is a function of, I think, really two things, concerns about takeaway, but also for reasons of priority of access to HH, people do want to maintain their history on the system. So we continue to see barrels that might have otherwise gone someplace else, and they’re continuing to come our way.”
If there was a shutdown of Dakota Access, it could expand the WTI differentials in the Bakken, he added.
Interstate Energy Partners, which is the parent company of Dakota Access, is appealing to the Federal District Court in Washington, DC, a recent decision by a judge to empty the pipeline while a 13-month environmental review takes place. The Dakota Access Pipeline moves 600 BOPD (Barrels of Oil per Day).
“It’s a bad broader message for pipeline infrastructure, but also for our business, particularly on the gathering side,” Kean said.
In the meantime, Crestwood Equity Partners said it is capable of moving 160,000 BOPD of crude oil by rail out of its Epping, ND terminal.
It is one of a dozen terminals capable of moving crude out of the state. About 300,000 BOPD—one third of North Dakota’s daily production, is shipped out daily on unit train tanker cars. Moving oil by rail has a greater environmental impact, poses greater environmental and safety risks, and costs more.
“In the event of a shut-down of the DAPL pipeline, Bakken basis differentials will be negatively affected in the short term until production volumes are reallocated to other pipelines and rail facilities,” said Crestwood President, Chairman and CEO Robert G. Phillips.

Flexibility Act Gives Options

26 June 2020
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With the passage of the Paycheck Protection Program (PPP) Flexibility Act by Congress, the US Small Business Administration has announced it will promptly issue rules and guidance to implement them, including a modified borrower application form, and a modified loan forgiveness application.

 The modifications will implement the following important changes:

Extend the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks after the date of loan disbursement, providing substantially greater flexibility for borrowers to qualify for loan forgiveness.  Borrowers who have already received PPP loans retain the option to use an eight-week covered period.

* Lower the requirements that 75 percent of a borrower’s loan proceeds must be used for payroll costs and that 75% of the loan forgiveness amount  must have been spent on payroll costs during the 24-week loan forgiveness covered period to 60 percent for each of these requirements. If a borrower uses less than 60 percent of the loan amount for payroll costs during the forgiveness covered

period, the borrower will continue to be eligible for partial loan forgiveness, subject to at least 60 percent of the loan forgiveness amount having been used for payroll costs.

* Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees for borrowers that are unable to return to the same level of business activity the business was operating at before February 15, 2020, due to compliance with requirements or guidance issued between March 1, 2020 and December 31, 2020 by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention, or the Occupational Safety and Health Administration related to worker or customer safety requirements related to COVID–19.

* Provide a safe harbor from reductions in loan forgiveness based on reductions in full-time equivalent employees, to provide protections for borrowers that are both unable to rehire individuals who were employees of the borrower on February 15, 2020, and unable to hire similarly qualified employees for unfilled positions by December 31, 2020.

* Increase to five years the maturity of PPP loans that are approved by SBA (based on the date SBA assigns a loan number) on or after June 5, 2020.

* Extend the deferral period for borrower payments of principal, interest, and fees on PPP loans to the date that SBA remits the borrower’s loan forgiveness amount to the lender 

* In addition, the new rules will confirm that June 30, 2020, remains the last date on which a PPP loan application can be approved.

SBA Administrator Jovita Carranza and U.S. Treasury Secretary Steven T. Mnuchin  said, “We want to thank President Trump for his leadership and commend Leader McConnell, Leader Schumer, Speaker Pelosi, and Leader McCarthy for working on a bipartisan basis to pass this legislation for small businesses participating in the Paycheck Protection Program.

  “This bill will provide businesses with more time and flexibility to keep their employees on the payroll and ensure their continued operations as we safely reopen our country.”

Duo Promoted to Joint Position

25 June 2020
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Heather Gnerer and Melisha Williams have been promoted to assistant vice president, customer service officers at their respective branches. Their responsibilities include operational support and market assistance in regards to customer service, staff training, assisting customers and overseeing the delivery of new account services and client support.

Gnerer brings over 10 years of banking experience to the position, which includes customer service, account openings and new business development. She has been with Stockman Bank since 2014 and was previously a customer service representative at the Billings Heights location.

She earned her Associates Degree in administrative assistant of applied science from Montana State University Billings in 2010. She has completed the Billings Chamber of Commerce Leadership program and participates in Stockman Bank related events. Gnerer is located at 800 Main Street. 

Williams has been with Stockman Bank since 2011, bringing nine years of banking experience to the position which includes bank operations, Billings market escrow clerk, new account openings, customer service and business development. She previously served as a customer service representative/teller supervisor for Stockman Bank in Worden.

Williams is involved in the community, participating in the Worden Community Cleanup and the annual Stockman Customer Appreciation tailgate party. She is located at 2450 Main Street in Worden.

Endless Litigation

24 June 2020
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By Aaron Johnson, Western Energy Alliance

Last month, we reported that Judge Morris in Montana and Judge Bush in Idaho vacated leases in Wyoming, over the objections of the State of Wyoming and Western Energy Alliance who intervened in defense of the Interior Department. Another month, another ruling by activist Judge Morris vacating yet more lease sales in Montana and Wyoming. This time the judge claimed that the leases had to be canceled because the Bureau of Land Management didn’t defer acreage from the sales, even though the sales were conducted under the Obama Administration’s sage grouse plans, which the judge prefers. It’s another clear case of this activist judge imposing his policy preferences from the bench. We like our chances on appeal.

Emboldened by their successes, possessing unlimited funds and not content with any leasing at all, environmental groups filed yet another lawsuit, this time challenging 23 sales from 2016 to 2019 involving over 2,000 leases in Colorado, Montana, New Mexico, Utah, and Wyoming. Western Energy Alliance quickly intervened, as it’s important for the industry to have a seat at the table in defense of federal leasing. Basically every lease sale from 2016 to 2019 is covered by a lawsuit. Western Energy Alliance has taken a leading role in defending the integrity of the federal leasing system.

Chamber Advocated for More Outdoor Seating

24 June 2020
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The Billings Chamber of Commerce announced last week, “With only one dissenting vote, City Council approved a resolution that will allow restaurants and bars to serve more people outdoors. The Billings Chamber, in partnership with the Yellowstone County Economic Response & Recovery Team and city staff, helped lead the way in identifying the need for this resolution and bringing it to City Council.

“As the state of Montana moves ahead into Phase II of the governor’s reopening plan, restaurants can technically increase occupancy from 50% to 75%, but many establishments are forced to remain at half capacity due to social distancing requirements. The resolution that was passed on Monday will allow establishments to seat more customers by allowing them to temporarily expand their outdoor seating areas or create new ones where alcoholic beverages can be served. This temporary ordinance passage means more economic activity, jobs, and is a step in the right direction for our return to normal.”

Billings Housing Market 14th Most Steady

24 June 2020
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The Billings metro area ranks 14th among the top housing markets for growth and stability in the US, according to an analysis by SmartAsset.

When home prices increase too rapidly over a short period of time, a boom can quickly turn into a bust. That said, housing markets with stable, incremental growth are generally preferable for homeowners looking for a decent return on their investment. 

While it’s too early to tell how the coronavirus pandemic will affect local housing markets, stated the report, some have better weathered past financial storms.

By analyzing historical data, SmartAsset’s sixth annual study set out to find the housing markets that have experienced the most stable growth throughout the past 25 years (1995-2019). “We specifically considered data on home price growth and volatility in 357 metro areas nationwide.”

While Montana ranked 14th, Bismarck, ND ranked seventh in the nation. The Bismarck, metro area was very stable over the past 25 years, with a 0% chance of a 5% housing price drop in the first 10 years after the purchase of a home. Bismarck also came in 48th-highest out of 357 in our study for home price growth from 1995 through 2019, at 194.01%.

Midland, Texas is the number one U.S. metro area for growth and stability in the housing market. The odds of a 5% loss in home price in the 10 years after it was purchased (during the 25-year period from 1995 through 2019) was 0%, and the overall home price growth in that 25-year period was about 287.82%, the fourth-highest rate for this metric across all 357 areas we studied.

Numerous cities in Texas ranked high in the analysis. All of the top 50 were in the western US.

Montana Highlights June 15 2020

23 June 2020
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Cost to rent a cabin or campground at 12 rental cabins and two campgrounds in the Flathead National Forest have increased. Existing rental fees in the Flathead National Forest have not been changed for over 15 years

Neuro-ID, the Whitefish technology company that provides insight into customer behavior during digital transactions is growing. The company just started a global partnership with TransUnion. The company has moved into a new office space on Wisconsin Avenue in Whitefish.

The Red Lodge Home of Champions Rodeo has been canceled for the first time in its history. The rodeo dates back to the 1890s.

Burlington Northern Santa Fe Railway’s announcement to close the Glendive Diesel Shop has left several questions unanswered by BNSF. What jobs will remain after the diesel shop closes, what will happen with local railroad facilities and how will BNSF handle abandoned spur lines are some of the unanswered questions.70 BNSF positions will remain in Glendive, though the railroad would not provide information as to what departments they will fall under.

Oasis Petroleum started the year with two rigs in the Williston Basin and two in its acreage in the Delaware. The company has completed 18 wells in the first quarter of 2020, and brought six online. These wells helped it cut first quarter spending below expectations.

Golden Ticket Cinemas Butte 6 theatres opened on June 12 in the Butte Plaza Mall.  AMC theaters closed their doors in Butte on Feb. 20. Golden Ticket has theater complexes in Dubois, Pennsylvania; Lenoir, North Carolina; Scottsbluff, Nebraska; Washington, North Carolina; Willmar, Minnesota; and Rapid City, South Dakota.

The Gallatin City-County Health Board has voted to open poker rooms and allow people to sit at bars while maintaining 6 feet from other patrons. Those businesses can stay open until 12:30 a.m. Distilleries and breweries can seat people at countertops under the same rules but are

Small businesses across the nation have been severely hurt by the COVID-19 pandemic, but the impact in North Dakota has not been as great, according to U.S. Census data. Over the four weeks of data, the percent of North Dakota small businesses reporting a large negative impact has been lower than the percentage nationwide. North Dakota businesses were likely to report moderate impact, and were more likely to report little to no impact as compared to other areas of the nation. Nationally, 51 percent of small businesses reported large negative impacts for the week ended May 2, but only 40 percent of North Dakota businesses reported large negative impacts.

Beginning the first week in July, Delta will suspend its daily flight into Williston, ND. The US Department of Transportation exempted Delta Air Lines under the CARES Act from having to fulfill its obligation to provide one flight a day three days a week. Delta currently operates once daily service from the Williston Basin International Airport to Minneapolis, MN. 

After a winter hiatus, Blink Rides E-scooters have returned to Bozeman. The scooters are made available at convenient locations. An app uses a bluetooth connection to unlock the scooter and pay for it. The scooters charge an initial fee for the first minute and then continue to add on for every minute afterwards.

Kels Koch has opened the Wax Museum in Bozeman, a record shop selling vintage vinyl and other hard to find music. Koch reported that for the first time since 1986, vinyl is poise to outsell CDs.

Sara and Dustin Harmon are expanding their Montana based business to Williston by opening a tasting room in August or September. The Harmons created Wild Calf Coffee in 2017. They roast, package, and ship their products from Bainville, and they are sold in grocery and gift stores  throughout North Dakota and Montana.

Kart Kleen in Missoula is an emerging new business of Jason Gardiner, who has developed a machine to clean shopping carts. Gardiner plans to have the machines in stores throughout the state.

KLJ, an engineering firm, announced that Mike Hinshaw has been promoted to Market Manager for the company’s water market. In his new role, he is responsible for executing business development strategies to best serve current and future clients’ needs. Hinshaw, who works from KLJ’s Bozeman location, has been with the company since 2019. He previously served as a civil engineer focusing on a variety of projects, specifically with extensive experience in hydraulic design.

KLJ announced that Tim Uribe, project manager and project delivery manager, out of KLJ’s Helena office was recently recognized with the Patriot Award from the Employer Support of The Guard and Reserve. The award recognizes supervisors for support provided directly to the nominating service member and their family. Ben Aarhaus, nominated Uribe, his supervisor, for the award for his support during recent events in which Aarhaus’ wife was deployed. LTC Alyssa Aarhaus is the Battalion Commander of the 193rd Military Police Battalion and Task Force Commander of the Colorado National Guard’s Task Force organizing an Alternate Care Facility to slow the spread of COVID-19.

The Helena-Lewis and Clark National Forest’s update to its forest plan predicts the forest will contribute about 2,000 jobs in the next 10-15 years. Forest plans are overarching documents that drive management of forest lands.

The Bozeman airport is seeing a record low for passengers. Brian Sprenger the Airport Director said he believes that the Bozeman airport has been the most impacted in the country. While on a typical day, the Bozeman Yellowstone International Airport sees an average of 44 departures and 44 arrivals, with as many as 5000 people moving through the airport, the daily traffic has been closer to 50 during the COVID-19 shutdown. The lower traffic as in all cases means economic losses for the community. Sprenger estimated that the loss for southwest Montana amounts to $1 billion.

Missoula County Commissioners have approved a resolution that outlines a plan that would re-establish the North Coast Hiawatha railroad service through southern Montana. Amtrak operated the routed from 1971 to 1979. It included Miles City, Billings, Livingston, Bozeman, Helena, Missoula and Paradise, among other communities. It originates in Chicago and ends in Sand Point, where passengers may continue on to either Portland or Seattle. To be called Big Sky Passenger Rail Authority, its organizers are seeking the support of other counties. If another county approves the resolution, the authority would be established.

One business that is closing in Butte due to the COVID-19 closures is a gift shop on Main Street, Beautiful Butte and Beyond, which has been selling everything from t-shirts to mugs and homemade signs – mostly made-in-Montana items — for the past four years. The business was owned by Pat Campbell, who says she hopes to continue business through her website.

A brother and sister in Manhattan have opened an outdoor theater in response to the COVID-19 social distancing restraints to great success. Porter Blanchard, a Manhattan High School Senior, essentially started his own business because they were “super bored” with the quarantine. They had an empty pasture and a big screen and utilizing the car radio for sound and some spray paint to mark parking spaces, and began an open air theater. They attract 20 – 30 vehicles each night. It’s called “The Pasture Drive-in Theater.”

Public access to NorthWestern Energy’s property at Hauser Dam will be controlled to primarily daylight hours beginning in November. The change in public access is to mitigate illegal activities occurring in the area at night, including underage use of alcohol, drug use, etc. These activities create a risk to public safety, interfere with recreational uses in the area, and in some cases threaten residents

Emergency Fund for Businesses

23 June 2020
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Drawing upon the $1.5 billion that the federal CARES Act extended to Montana to deal with COVID-19 crisis impacts, the state has established a $123 million emergency grant program for small businesses, non-profits and individual impacted by the shutdowns and safety protocols.

The Governor announced nine programs that will be available to businesses, social service nonprofits, farms and ranches, emergency housing and food bank assistance, telework and seniors.

The grants addresses needs identified by the state Coronavirus Relief Fund Advisory Group, which was appointed by the Governor.

Organizations that haven’t yet received federal relief loans will be given priority by the Department of Commerce which is administrating the program.

Businesses and non-profits should prepare tax ID, proof of business registration, a brief description of the proposed project and covid-19 impacts.

The Montana Business Stabilization Grant program will provide working capital for Montana-owned small businesses with 50 or fewer employees that have sustained a loss of revenue due to COVID 19. Current funding available is $50 million, the maximum award amount per business is $10,000.

• The Montana Innovation Grant program is intended to help companies scale up, improve capabilities, or drive expanded distribution of products or services developed in response to COVID-19. Non-profit and for-profit businesses of less than 150 employees with primary operations in Montana that have created an innovative product or service intended to directly confront the COVID-19 emergency can apply for grants of up to $25,000. Current funding available is $5 million.

• Montana Food and Agriculture Adaptability Program grants are available to food and agriculture businesses to help increase community resilience amid the economic disruptions. Current funding available is $500,000, with a maximum grant award of $10,000.

• Emergency Housing Assistance Program will provide rent, security deposit, mortgage payment, and/or hazard insurance assistance as-needed for Montanans who have lost a job or substantial income loss of the economic shutdown. Initial payments may include up to three months assistance where the eligible household can demonstrate arrears for April and May, with continuing inability to make their June payment. Montana Housing will pay the difference between 30 percent of the household’s current gross monthly income and their eligible housing assistance costs, up to $2,000 a month. Household income limits range from $75,000-$125,000 based on family size. Montanans receiving other forms of housing assistance are not eligible. Total funding available is $50 million.

• Public Health Grants are available to local and tribal health departments and urban tribal clinics and to meet the needs of their communities. Each organization is eligible to apply for funding. Current funding available is $5 million.

• Stay Connected Grants ranging from $500-$2,000 per applicant are available to reduce social isolation among Montana’s seniors. Eligible applicants include area agencies on aging, assisted living facilities, nursing homes, and tribal elder services. Grant funds can be used to fund technologies and other efforts to encourage physically distant forms of social interaction for elderly Montanans. Current funding available is $400,000.

• Food Bank and Food Pantry Assistance of up to $50,000 per applicant are available to increase food security for Montanans. Eligible applicants include community organizations providing food assistance to Montanans with limited resources, food banks, food pantries, community cupboards, and entities with infrastructures already in place to begin new food distribution programs. Current funding available is $2 million.

• Social Services Nonprofit Grants of up to $10,000 per applicant are available for nonprofit organizations impacted by the COVID-19 public health emergency to retain existing programs and services, employees, or organizational viability for provision of future services and operations. Eligible applicants are registered, Montana-based social service nonprofits that were operating prior to February 15, 2020. Current funding available is $10 million.

• Telework Assistance Grants of up to $1,000 per individual will go towards purchasing equipment to assist Montanans with disabilities access telework equipment. DPHHS will partner with a local non-profit organization to assess and support assistive technology needs of individuals with disabilities. This assistance will help people with disabilities have the equipment needed to adapt to the change in working environment due to required protocols. Current funding available is $650,000.